The Consistent Traders Blueprint
The Consistent Traders Blueprint
Blueprint
Trading can be thought of as an art. In order to paint a portrait, first you must trace the outlines, set up the
model, prepare your brushes and have a patient temperament to meticulously complete the painting
process. Trading requires you to prepare and learn to control your temperament. So before asking how
do I start trading, ask yourself what do I need to do before I start trading?
These techniques, along with other calming methods, will help you maintain emotional control while you
trade. Anger, fear, greed, jealousy, and doubt, cloud your ability to successfully and objectively trade. The
most important aspect of trading is to trade without emotion. When they say 90% of traders fail, it’s
because they let emotions overpower their commitment to a trading plan. Trading requires both a
financial investment and a personal investment.
have money to invest when you’re ready to buy your first stock.
If you have placed money aside that you are able to invest then you are one step closer to starting! If not,
you need not worry! It is never too late to start setting aside money to invest. However in order to create
the capital you will need to trade, you will need to change or modify your financial habits.
You need to ask yourself - What can I do to save more money? In what ways can I spend less? In what
ways can I make more? What sacrifices am I willing to make to set aside money? You must be willing to
accept short-term pain. Successful trading is not a game of instant gratification. Understand that in
order to have long-term success, you must be willing to make short term sacrifices. Accepting short term
sacrifices can sound hard and discouraging, but remember most people don’t want to make the
sacrifices needed, so if you do, you’ll be ahead of the curve! If trading was easy, everyone would be a
millionaire. Those who put in the time and sacrifice, are those who reap the rewards.
Start thinking of ways in which you can start building your trading capital so when you’re ready, you have
There is no set amount of money that you need to start trading! Make sure that the amount you start with
is something you are comfortable with. Although there is no set amount, you can potentially have a higher
return percentage with a higher level of investment. You should never trade with money you can’t afford
to lose because trading takes time to master; there will be wins and losses.
There are three types of trading - day trading, swing trading and long-term investing. Each requires
Day trading is when you enter and exit a trade within the same day. It requires extreme discipline, high
level emotional control, and interrupted time each morning. For day trading stocks, there is something
called the Pattern Day Trader rule in which you cannot make more than 3 intra-day trades (where you
buy and sell within the same day) in any 5 day period unless you have $25K+ in your trading account.
Swing trading is a great way for beginners to start trading. It requires less of a time commitment and less
emotional control than day trading. That is not to say that it requires none - all successful swing traders
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are able to put in their time, effort, and most importantly maintain an ob ective mindset when they trade.
Swing traders enter and exit traders within a couple days to a couple of weeks. They buy and sell based
on swings or pivot points in the charts. Additionally the account requirements for swing trading are much
Long term inves ting refers to buying and holding for years and years. It is exactly what it is named. This
requires less time and less emotional control than day trading - especially since you largely ignore the
day to day and month to month noise and volatility of the markets. Y
our goal is to make profit from your
Establish what parts of your schedule are fixed and what parts are flexible. After determining your
schedule set aside as much time as you can each day to both learn and trade. The stock market is open
from 9:30AM ET to 4PM ET on weekdays. Any trades you execute, will be done within this time frame.
There are different levels of time commitment for different types of trading:
Day trading requires at least 3 hours of uninterrupted time at the start of the trading day. The most
Swing trading, which we recommend for beginners, requires around 1-2 hours during the day. This
can be after work, this can be in the mornings. Most of the time spent is monitoring current stocks
you own and looking for new opportunities. If you’re not able to trade during market hours, you can set
up your trades off-hours to automatically execute through your trading platform when the market is
open
Long term investing requires a minimal amount of time as you are looking for stocks that will perform
well over the long term and are not focused on the day-to-day movements in the stock. You may
spend 20-30 minutes a day monitoring your portfolio performance as well as looking for
After establishing your trading schedule, be sure to be disciplined about sticking to it. Additionally you
should spend extra time outside of trading hours - or on weekends reviewing your trades and learning
more.
RECOMMENDED
Long Term
The Market
The market is the space in which individuals and institutions buy and sell financial instruments like
stocks, bonds, commodities, derivatives, and mutual funds. When first founded, the markets were
physical spaces where individuals would verbally buy and sell. Today this can all happen electronically!
The most commonly heard of financial instruments are stocks, but there are other instruments that can
be traded such as futures, options and bonds. Although you do not have to trade stocks, we highly
recommend that beginners focus on trading stocks. Focusing in on trading stocks can give you the
What is a Stock?
A stock is a unit of ownership in a company. The stock is what you buy and it is exchanged in units called
shares. Essentially when you buy stocks, you are buying shares, which is a small piece of that company.
The price of a stock will fluctuate, and after buying or selling a stock, you make profits or losses based on
those fluctuations. Owning stocks of a company gives you the opportunity to personally make profit off of
There are thousands and thousands of stock opportunities available at your fingertips. It can be
extremely difficult to find what stocks are best suited for you to trade. We recommend using a stock
scanner known as “Finviz” to screen for good stocks to pick. (https://finviz.com/). The key is to focus on
what you want from your portfolio, what industries interest you, and what companies are strong and
reliable. Start with a short list of stocks to monitor, so you don’t overwhelm yourself.
While share prices are much cheaper for penny stocks - stocks between ~$0-5 - they are more risky to
trade because the financial institutions and big players don’t trade them. This means penny stocks can
be manipulated and move extremely quickly. If you don’t pay attention, your account could be wiped out!
They also have more potential to be traded fraudulently. This is not a safe space for you to get started in
the markets.
As stated earlier, it is best to start with a small list of stocks, but as you grow your account, you will want to
diversify your portfolio. You don’t want the success or failure of your account to ride on one stock. You
want to have your capital in different spaces that are independent of each other to mitigate your risk. As
your account grows be sure not to place all your eggs in one basket!
The reason we use technical analysis is because it is in real time. In today’s electronic world, information
is quick to spread, and this information is traded on as soon as people find it.
A common phrase ‘Buy the rumor, sell the news’ is meant for those who follow the news to decide what to
do, and usually find themselves too late to the party. If you wait to trade on the news, you are usually
entering a trade too late. Everyone will already know the information that you're trading on, and you are
Technical Analysis predominantly relies on candlestick charts and analyzing trendlines. A candlestick
represents the fluctuations in price on any given time frame. For example if you were looking at a daily
chart, each candle would represent a day. A green candle shows an increase in price from the open and
Looking at the charts, you can see trends. There are uptrends in which the charts appear to move in a
general upwards direction, or downtrends in which the charts move in a general downward direction, or
sideways trends in which the charts move in a general horizontal fashion. Identifying these trends can
Uptrend
Downtrend
Sideways Trend
Earnings reports are where public companies discuss their financial results to the public. Earnings
reports are publically available knowledge, however institutions and big players typically know about a
company’s earnings before the report is launched so they will buy and sell shares beforehand.
Earnings reports are not guarantees of future earnings - therefore a stock with a good earnings report, but
meek future projections, may go down! This leaves those who traded the report, stuck with a loss - left to
hope and pray that the stock will eventually climb back up.
Downtrend
Trading is only gambling if you don’t have a plan or strategy. There is a difference between a reliable trader
and a gambler. Unlike gamblers, traders are professional risk managers who trade with only high
Traders who make consistent profits from technical analysis understand that you should never gamble
in the market. Although many people put their money in the stock market hoping to get lucky, for every
lucky trade these people make, they make 1000 unlucky trades.
In order to make steady profit off of your trades, you need to understand trading is all about consistency -
not about being lucky. Successful trades won by luck cannot be a reliable source of extra income.
Successful trades that are backed by knowledge, expertise, and patience can provide you with a reliable
For a beginner, Options is like gambling, it’s much more complex than trading stocks yet a lot of platforms
like Robinhood and others are making it readily available to new traders. Options are not as simple as
buying and selling shares, they are contracts for control of those shares with expirations. If you are wrong
about a trade, you will lose, but you will also lose if the market moves sideways and the contract reaches
expiration. There are more things that need to go right for you to be successful in Options so focus on
learning and trading stocks, because you can’t master options without mastering and understanding
affected by the buyers and sellers because they move demand and supply levels.
For example let’s compare a stock to a burrito. If 10 people want to buy one burrito, that burrito could be
sold for a high price because there is so much demand for that burrito. On the other hand if 10 people
already have burritos, and there are extra burritos, a burrito would be sold for a low price because there is
Similarly the price of a stock increases when demand for that stock is high, and price decreases when
the demand for that stock is low. Buyers push prices up by increasing demand, while sellers push prices
Therefore traders and large institutions determine price movement when they buy and sell their shares.
However since large institutions hold the majority of shares, they are able to heavily impact price
You may have heard of the phrase “buy low and sell high.” This phrase refers to a trading strategy known
as “going long” in which the trader buys stocks at a low price, then sells them at a higher price - profiting
off of the difference between when they bought and sold the stock.
To identify good places to buy and sell, it is important to look at historical data. Taking a look at charts
documenting historical price movement can help you see zones in which the price previously rose and
fell. Finding these “money zones” takes lots of practice and chart analysis - but once you’ve found them
To identify good places to buy and sell, it is important to look at historical data. Taking a look at charts
documenting historical price movement can help you see zones in which the price previously rose and
fell. Finding these “money zones” takes lots of practice and chart analysis - but once you’ve found them
Only after you’ve found a strong company - that is both reliable and financially stable - should you
consider buying shares. Remember that with unstable companies, sometimes the lows can go even
lower!
What is an IPO?
IPO stands for “Initial Public Offering.” This refers to the conversion of a private company into a publicly
traded company. An IPO is the launch where shares of a company are officially opened to trade on the
stock exchange.
An IPO marks the start of a company’s journey in the financial markets, and can seem very enticing to
investors. However buying shares of a company that has recently become public can be very dangerous.
This is because those companies have the capability to move quickly in either direction. Furthermore
traders cannot look to previous historical data to predict price movement. For every successful IPO,
Account Set Up
A Trading Platform is an electronic service where trade orders are placed. Individuals place orders, and
You may have heard of a few trading platforms - Robinhood, ETrade, Charles Schwab to name a few.
Robinhood has gained recent attention as a primarily app based trading platform. It catches new traders
because of its user friendliness, however it is very limited in its capabilities. You are actually unable to fully
utilize technical analysis or draw on charts to identify “money zones” via Robinhood.
two platforms because they give you the ability to draw on your charts and fully leverage all the
capabilities of technical analysis. Both platforms provide reliable customer support and great
customizations and features to fit the needs of beginners and veterans alike. TradeStation is compatible
with Windows OS, while Think Or Swim is compatible with both Mac and Windows OS.
It seems like everyone is keen to practice before performing in every other area of life besides the stock
practice interviewing before attending a real interview - but everyone seems to jump into trading before
they’ve practiced.
Trading has real world consequences, and those that jump into trading unprepared often suffer. Take a
step back, and be patient. Trading is about consistent gains, and consistency can not be achieved
With TradeStation and Think Or Swim, you can practice trading with what is called paper money.
Papermoney trading is essentially a simulation in which you trade with fake money! It is the perfect way
Risk Tolerance is essentially how much you are willing to risk losing on any given trade you make. Having
a set plan to manage your risk is extremely important because that is what separates the successful
A good rule of thumb is to have a 2:1 risk reward ratio. This means that if you're aiming to make $20 or
$30 per share on a trade, your risk would be $10 per share. The risk:reward ratio should be based on the
technicals and not arbitrary numbers. Don’t just make up numbers for risk and reward. You want to set
your risk at the point where the chart would tell you that you are wrong about the trade. Furthermore you
want to ensure that the chart shows a good possibility of reaching at least double the risk point.
A better way to look at this question is to ask yourself what should I not expect to make in the market?
Do not expect to get rich quick. Consistent trading is about just that - consistency. It is not about huge
Technical analysis shows you how to make the highest probability trades. This is not to say you will win
every trade! No trade is guaranteed to go your way because no one can predict the future. This is to say
that overall, despite the losses you may suffer short-term, the goal is to make steady profits. You must be
able to sustain small losses, both financially through risk management and personally by controlling your
long-term profits.
Your profits are amongst other factors, based on your account size, the stocks you trade, how much time
you put into your learning and how you are able to control your emotions - there is no one percentage
that everyone should expect to make since we all move at a different pace. The biggest trap is
EXPECTING consistent returns from the market. The market doesn’t owe you anything so don’t fall into
the trap of expecting certain things that will cloud your emotional judgement while trading.
...the trading world is waiting for you! The stock market provides a shiny new opportunity for you to make
money wherever you are. With practice, patience, and knowledge you too can share the glistening
rewards of the markets. Hold onto your feeling of motivation and hope, and rely on this throughout your
trading journey.
The best time to plant a tree was 20 years ago, the second best time is now. Now that you have this
starter kit, you have the answers you need to get started in your growth.